Business associations call on lawmakers to amend administration of retail excise tax on cigarettes

The European Business Association (EBA) and the Union of Ukrainian Entrepreneurs (UUE) have urged Ukrainian lawmakers to back bills Nos. 2501, 2502, 2503 dated November 27,2019, which provide for amendments in the administration of the retail excise tax on sales of cigarettes, obliging wholesalers to pay retail excise taxes instead of retailers.

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On December 6, the leading business associations of Ukraine, namely the EBA, the American Chamber of Commerce in Ukraine, and the UUE issued a general statement on the inadmissibility of increasing fiscal pressure on bona fide taxpayers, since the speed of adoption of the relevant bill leaves a number of critical remarks unaddressed.

After a meeting with Ukrainian President Volodymyr Zelensky, a memorandum of understanding between representatives of the tobacco industry (EBA member companies) and the Cabinet of Ministers of Ukraine was signed on December 12. The document provides for a number of measures to create a fair and transparent competition environment in the sector, combat illegal trade and tax evasion, and ensure predictability and transparency in the work of tobacco market players.

In particular, they agreed to facilitate competition in distribution channels, change methods to administer a 5% excise tax, elaborate licensing conditions for wholesale trade in tobacco, develop a system to monitor the movement of tobacco products, etc.